After the death of his wife left him alone to raise his five children, Patrick MacDonald was slapped with an unnecessary tax bill of $35,000 dollar because his bank made several mistakes. The bank offered to repay the money, but only after MacDonald went to the media to complain.
Many Canadians have their own pension plans called RRSPs. The plans allow them to save and shelter money until their retirement. When someone dies, their plan can be rolled over into their spouse’s plan without a tax consequence as long as it is done within a certain time frame.
Bank failed to transfer pension
MacDonald gave Scotiabank his wife’s will and death certificate and signed all the papers. He said he was assured the transfer would be looked after. However the bank failed to facilitate the transfer before a one-year deadline.
That meant that his wife’s money could no longer be rolled over into his RRSP where it could have continued to grow tax-free. It also became fully taxable to the tune of $35,000.
Bank makes amends
The bank has offered MacDonald $37,000 but it still has not released his wife’s funds saying it is still missing required paperwork.
An independent adviser believes the case highlight a wider problem—that Canadians banks are giving customers less and less personal service.
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